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Patience and Ultimatum in Bargaining

Author

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  • Segendorff, Björn

    (Dept. of Economics, Stockholm School of Economics)

Abstract

This study investigates in a two-stage two-player model how the decision to make an ultimatum and how much to demand depends on the impatience of the agents and the pie uncertainty. First, players simultaneously decide on their ultimatums. If the ultimatum(s) are compatible then the player(s) receive his (their) demand(s) in the second period and the eventually remaining player becomes residual claimant. If no ultimatums are made then there is a Rubinstein-Ståhl bargaining. Relative impatience induces ultimatums but does not affect the demanded amount. In a discrete (continuous) setting there exist no equilibrium without an ultimatum (with mutual ultimatums).

Suggested Citation

  • Segendorff, Björn, 2001. "Patience and Ultimatum in Bargaining," SSE/EFI Working Paper Series in Economics and Finance 461, Stockholm School of Economics.
    • Handle: RePEc:hhs:hastef:0461
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    References listed on IDEAS

    as
    1. Muthoo, Abhinay, 1996. "A Bargaining Model Based on the Commitment Tactic," Journal of Economic Theory, Elsevier, vol. 69(1), pages 134-152, April.
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    3. Harold Houba & Wilko Bolt, 1997. "Strategic bargaining in the variable threat game," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 11(1), pages 57-77.
    4. Muthoo,Abhinay, 1999. "Bargaining Theory with Applications," Cambridge Books, Cambridge University Press, number 9780521576475.
    5. Kambe, Shinsuke, 1999. "Bargaining with Imperfect Commitment," Games and Economic Behavior, Elsevier, vol. 28(2), pages 217-237, August.
    6. Crawford, Vincent P, 1982. "A Theory of Disagreement in Bargaining," Econometrica, Econometric Society, vol. 50(3), pages 607-637, May.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Ultimatum; Bargaining; Patience; Rubinstein-Ståhl;
    All these keywords.

    JEL classification:

    • C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games

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